Chapter 24 Rewarding and Developing Employees

Chapter 24: Rewarding and Developing Employees Lesson 24.1: Compensation Planning Compensation Plans - - There are many benefits that employees receive for their labor - Paid vacations - Company-sponsored insurance - Health and wellness programs - On-site day care - Employee assistance programs Compensation - the pay and other benefits employees receive in exchange for their labor - Method used to determine pay is important to attract employees, motivate them, and retain the most motivated ones - Compensation system must be fair to encourage effective work. Factors affects employee’s pay - skill requirements, work conditions, amount of experience/education of individuals, supply and demand for work type, and economic conditions - Wage - pay based on an hourly rate or for the completion of a specified amount of work - Salary - fixed amount of pay made on a regular schedule such as weekly or monthly - Most often paid to executives, supervisors, professional, and people without fixed schedule - Compensation plan - a system of policies and procedures for calculating the wages and salaries in an organization - Different methods based on type of work and qualification of employees in a business - Commonly based on time, performance, or a combo Time Plans - Time plan - pays a certain amount for a specified period of time worked - Most common payment method - Easy to administer because pay is based directly on time - Do not reward employees for outstanding work - Neither rewarded nor penalized based on efforts Performance Plans - Two types of plans pay employees for amount of work produced - Commision plan - pays for percentage of the volume of sales for which they are responsible - Provides direct incentive because efforts determine pay - Negative - encourages employees to only focus on largest commission - Try to sell products that customer does not need - May concentrate only on larger customers and ignore smaller, but important customers - May not complete other tasks that take away selling time Piece-rate plan - pay employee fixed rate for each unit produced - Pay is based directly on amount of work employee produce - Negative - new employees would have difficulty earning because of inexperience and lack of efficiency in comparison to experienced workers - Experienced workers may also use shortcuts to increase production - safety/quality problems - Some companies are developing ways to compensate performance on specific, short-term projects motivating employees while not adding too much to organization’s costs. - Reward - often a product or service rather than money Combination Plans - Combination plan - a pay plan that provides each employee a base wage or salary and adds incentive pay based on percentage - Assure employee specified amount of money, but can earn additional reward for effort - Effective for jobs with activities that do not directly result in increased production/sales - Bonus - money paid at the end of a specific, but long period of time. - Relate employees rewards to achievement of important company goals or overall organizational performance Factors Affecting Pay Levels - Importance of job - Skills of employees - Experience of employees - Years at company - Supply and demand for labor - Economic conditions - Wage rates in community and industry - Federal and state labor laws Importance of Compensation Planning - Largest expenses of a company - Must be paid consistent with sales and other income earned by the business - Compensation = too high means no profit for company - Compensation = too low means no attraction of employees to company - Employ economists and specialists to determine the total amount of money that should be spent on compensation - Small companies try to compare wages and salaries offered by competitors to not lose employees - Difficult to change compensation plan - Need approval to change by executives and should involve employee groups - Should be explained to employees and give time to adjust Meeting Legal Requirements - Must meet all federal state laws - Minimum wage - Minimum wage laws - illegal for employers to pay less than an identified wage rate to an employee - Developed as both social and economic policies - Employees cannot be exploited - Most states have established higher minimum wages than federal law. - Compensation Discrimination - Employees must have fair levels of compensation - Equal compensations for workers who performs jobs with the same skill, effort, and responsibility - similar working conditions - Illegal - unfair differences based on race, ethnicity, religion, gender, national origin, age, marital status, or disability Competitive Pressures - Affected by competitors when establishing pay rates - Employees usually consider many businesses when deciding on job and are attractive to businesses with best compensation, benefits, working conditions, and advancement possibilities - Move productions to lower-wage countries - for higher income with lower production cost - As businesses respond to more and more international competition, it is no longer possible to compare compensation levels only with those of competitors in the same state or country Lesson 24.2: Employee Benefits Customary Employee Benefits - Employees often receive other valuable benefits from their employer as part of their total compensation - When making the decision to accept a promotion, the wage or salary level is often considered the most important factor in the decision - Employee benefits - all forms of compensation and services that a company provides to employees in additions to salaries and wages - Can increase the total compensation an employee receives Common Employee Benefits - Insurance - businesses make it possible for their employees to obtain insurance at lower costs through group insurance policies - - Common types of insurance - Health, vision, dental, life, disability - Often covers family members Retirement Plans - designed to help retired employees have a steady income - 2 major categories of retirement plans: - Defined benefit plan - Specific monthly benefit to retired employees determined by their years of employment and amount of earnings while employed - Defined contribution plan - regular payments to an employee retirement account but does not guarantee a specific monthly benefit to be paid on retirement. - Retirement income depends on the value of earning from investments. - Tax-deferred - employee contributions to most retirement plans are made before taxes are calculated on the employee’s income - Profit-sharing plan - contributions to employee employee retirement funds based on the profits earned by the company during the year. - Stock-bonus plans - similar to profit-sharing plans but contributions to employee retirement are made in the form of company stock. - Vacations and time off - paid or unpaid - Most companies pay employees their regular wage or salary during vacations - Some companies are closed for holidays and may pay their employees for those days - Due to illness, personal business, illness/death of family members, birth/adoption of child - Required benefits - federally/state required - Social Security and Medicare contributions - Workers’ compensation - Unemployment insurance Hours of Work - Companies often stagger the workweek by having some employees start their week on days other than Monday - Allows them to operate seven days a week without having employees work more than five days - Flex-time - lets employees choose their own work hours within specified limits - Job Sharing - allows two people to share one full-time job Other Benefits - - Many companies offer other benefits such as - Free/low-cost parking - Food services and cafeteria - Discounts on products by company Cafeteria plan - A program in which employees can select the benefits that meet their personal needs - Employees can choose song benefits with equal value or give up certain benefits and receive their cost as additional compensation - Other increasingly important benefits are programs that help employees locate and pay for convenient care for children or other family members including elderly parents Improving Human Resources Services - Use of Technology - Managing human resources requires a great deal of info pertaining to every employee in the organization. - Computers have greatly improved how companies gather and store employment information. - Made entering, retrieving, and updating personnel information more efficient - To keep records confidential, companies take security precautions, such as limiting access and requiring a password to access employees’ files - Made HR activities more efficient - provides a way for employers and job seekers to exchange information - Help companies communicate new policies or new benefit options to employees throughout the company and the world - Outsourcing Services - Outsourcing - hiring an outside firm to perform specialized tasks. - Ex. a company may hire an outside employment agency to perform all - of its employment activities, including recruiting, selecting, and even training Lesson 24.3: Improving Employee Performance Employee Performance Review - - Two requirements for maintaining a high-quality workforce - Have an effective system for performance review - well-designed training and development programs Performance Review - the process of assessing how well employees are doing their jobs - Used for career planning, determining increases in wages and salaries, and planning training programs. - Occurs once or twice a year - Forms and records should be specific to each employee’s job and based on the employee’s job description and job responsibilities. Conducting a Performance Review - First step - developing process to determine what to evaluate - Next - human resources department prepares forms and procedures for performance reviews - Should be designed to make the review process as easy and objective as possible - Managers could show biases or base evaluations on recent work or general observations - managers should use observation forms and record information on the employee’s performance - Should be specific to each employee’s job and based on the employee’s job description and job responsibilities - Employees should be just as careful and objective in completing their self-evaluation as they expect their supervisor to be Performance Review Conference - Information from performance review should be discussed in a conference - Guidelines for managers to make the evaluation conference positive - Schedule enough time to review employees job, evaluations, and career plans - Focus on employee performance ONLY - Discuss strengths and weaknesses - Allow employees to discuss performance, the job, working conditions, and available support - Agree on a specific development plan for next work period If a employee is terminated for having performance below standard, managers should ensure they are not surprised by the negative info Informal Reviews - Aside from reviews, managers should regularly provide informal feedback, support, and encouragement to all employees - Helpful to employees in understanding their jobs and how they can improve or even prepare for promotions/career advancement Planning Training and Development - - Training is divided into two categories - Organization - Delivery Formal training - carefully planned instruction with a specific curriculum and instructor. - May be offered by the company, professional, and trade associations, schools and colleges, or private companies - Increasingly delivered using tech Informal training - unstructured instruction developed for specific situations or individuals - Often delivered by a supervisor, co-worker, or mentor in one-on-one situations with an individual employee or a small group of employees. - Characteristics of Effective Training Programs - Be interesting to trainee - Be related to knowledge that trainee has developed - Explain why something has to be done - Progress from simple to difficult steps - Let trainee learn complicated procedures in small steps - Allow practice time - Let trainee concentrate on becoming comfortable before worrying about accuracy - Provide regular, positive feedback on progress - Be done in short time blocks with various activities - Involve the learner in training activities Effective Training - As companies recognize the value of training, they are working to develop more effective training procedures - Designed to help people learn Identifying Training Needs - Important for all companies to determine the need for employee training - Poor work performance can be caused by insufficient training - When new employees are hired or experienced employees are promoted to new jobs, they do not have all the skills they need to begin work immediately - Signals for the need of training include conflicts among employees, areas of customer dissatisfaction, or work hazards and employee injuries - In some companies, each department forms a problem-solving group made up of managers and employees Types of Training - Basic skills training - Occupational safety training - Employee health and wellness training - New employee orientation training - Awareness training - Communication, employee development, and quality training - Job skills training